The General Law that Determines the Rise and Fall of Wages and Profits

We have said: "Wages are not a share of the worker in the commodities
produced by him. Wages are that part of already existing commodities with which
the capitalist buys a certain amount of productive labor-power." But the
capitalist must replace these wages out of the price for which he sells the
product made by the worker; he must so replace it that, as a rule, there
remains to him a surplus above the cost of production expended by him, that is,
he must get a profit.

The selling price of the commodities produced by the worker is divided, from
the point of view of the capitalist, into three parts:

First, the replacement of the price
of the raw materials advanced by him, in addition to the replacement of the
wear and tear of the tools, machines, and other instruments of labor likewise
advanced by him;

Second, the replacement of the wages
advanced; and

Third, the surplus leftover –
i.e., the profit of the capitalist.

While the first part merely replaces previously existing values,
it is evident that the replacement of the wages and the surplus (the profit of
capital) are as a whole taken out of the new value, which is produced by the
labor of the worker and added to the raw materials. And in this sense we can
view wages as well as profit, for the purpose of comparing them with each
other, as shares in the product of the worker.

Real wages may remain the same, they may even rise, nevertheless the
relative wages may fall. Let us suppose, for instance, that all means of
subsistence have fallen 2/3rds in price, while the day's wages have fallen but
1/3rd – for example, from three to two shillings. Although the worker can
now get a greater amount of commodities with these two shillings than he
formerly did with three shillings, yet his wages have decreased in proportion
to the gain of the capitalist. The profit of the capitalist – the
manufacturer's for instance – has increased one shilling, which means
that for a smaller amount of exchange values, which he pays to the worker, the
latter must produce a greater amount of exchange values than before. The share
of capitals in proportion to the share of labour has risen. The distribution of
social wealth between capital and labour has become still more unequal. The
capitalist commands a greater amount of labour with the same capital. The power
of the capitalist class over the working class has grown, the social position
of the worker has become worse, has been forced down still another degree below
that of the capitalist.

What, then, is the general law that determines the rise and fall of wages
and profit in their reciprocal relation?

They stand in inverse proportion to each other. The share of (profit)
increases in the same proportion in which the share of labour (wages) falls,
and vice versa. Profit rises in the same degree in which wages fall; it falls
in the same degree in which wages rise.

It might perhaps be argued that the capitalist class can gain by an
advantageous exchange of his products with other capitalists, by a rise in the
demand for his commodities, whether in consequence of the opening up of new
markets, or in consequence of temporarily increased demands in the old market,
and so on; that the profit of the capitalist, therefore, may be multiplied by
taking advantage of other capitalists, independently of the rise and fall of
wages, of the exchange value of labour-power; or that the profit of the
capitalist may also rise through improvements in the instruments of labour, new
applications of the forces of nature, and so on.

But in the first place it must be admitted that the result remains the same,
although brought about in an opposite manner. Profit, indeed, has not risen
because wages have fallen, but wages have fallen because profit has risen. With
the same amount of another man's labour the capitalist has bought a larger
amount of exchange values without having paid more for the labour on that
account – i.e., the work is paid for less in proportion to the net gain
which it yields to the capitalist.

In the second place, it must be borne in mind that, despite the fluctuations
in the prices of commodities, the average price of every commodity, the
proportion in which it exchanges for other commodities, is determined by its
cost of production. The acts of overreaching and taking advantage of one
another within the capitalist ranks necessarily equalize themselves. The
improvements of machinery, the new applications of the forces of nature in the
service of production, make it possible to produce in a given period of time,
with the same amount of labour and capital, a larger amount of products, but in
no wise a larger amount of exchange values. If by the use of the
spinning-machine I can furnish twice as much yarn in an hour as before its
invention – for instance, 100 pounds instead of 50 pounds – in the
long run I receive back, in exchange for this 100 pounds no more commodities
than I did before for 50; because the cost of production has fallen by 1/2, or
because I can furnish double the product at the same cost.

Finally, in whatsoever proportion the capitalist class, whether of one
country or of the entire world-market, distribute the net revenue of production
among themselves, the total amount of this net revenue always consists
exclusively of the amount by which accumulated labour has been increased from
the proceeds of direct labour. This whole amount, therefore, grows in the same
proportion in which labour augments capital – i.e., in the same
proportion in which profit rises as compared with wages.